Boeing Frontiers
March 2003
Volume 01, Issue 10
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Cover Story

With the 7E7, Commercial Airplanes looks to solve the riddle in the middle


Sometimes the middle gets a bum rap: middle of the road, middle aged, middle of nowhere. But when it comes to the commercial airplane market, sometimes the middle is exactly where you want to be.

Late last year, Boeing Commercial Airplanes President and CEO Alan Mulally announced that the company was shifting its nearer-term product development focus from the speedy, futuristic-looking Sonic Cruiser in favor of a highly efficient, environmentally friendly, e-enabled, more conventional-looking airplane. Temporarily dubbed the Boeing 7E7, this airplane will meet the needs that commercial airline customers worldwide have expressed; and it will serve the flying public effectively and grow the middle of the market.

But with a comprehensive family of airplanes ranging from the 100-seat 717 to the 400-plus-seat 747, why would Commercial Airplanes focus on the middle of the market for its latest developmental project?

What is the middle of the market?

The middle of the market, generally defined, is the segment that airplanes such as the 757, 767 and Airbus A300/A310 and A330 currently serve. These aircraft can fly ranges of approximately 3,000 to 6,500 nautical miles and carry passenger loads of approximately 180 to 250 people in both single- and twin-aisle configurations.

While the middle-market models didn't set any records for number of sales in 2002, this segment presents opportunities for increased sales in the future—up to 3,000 units over the next 20 years—in regions around the world.

''The large twin-aisle segment is currently occupied by the 777, which offers superior comfort, performance and economics to its primary competitor, the A340,'' said Randy Baseler, vice president of Marketing for Boeing Commercial Airplanes. ''The 777 and its derivatives are proving to be very popular with our customers needing larger aircraft. Boeing is represented well in this lucrative market segment with a product that will remain the leader for years to come.''

And airplanes the size of the smaller, single-aisle 737 also are in a strong position in the marketplace.

''The Next-Generation 737s entered service in 1997, so they, too, will be highly effective in the years to come,'' Baseler said. ''And the Next-Generation 737 is the best-selling airplane ever, delivering 1,247 airplanes in its first five years.''

The ideal new airplane to best serve the middle market should be able to operate equally efficiently whether traveling distances shorter than 3,000 nautical miles or as far as 7,800 nautical miles. Efficiencies at shorter ranges are ideally suited to Asia—and somewhat in the United States and Europe—where route density limits the use of single-aisle airplanes. A new airplane also must meet demands where twin-aisle passenger appeal and lower-deck cargo requirements are significant.

If an airplane can be developed capable of flying distances equivalent to a 777 while carrying a 767-level payload, and capable of getting passengers to their destinations quicker, it will allow airlines to offer new nonstop services—profitably.

Bridging the gap; maximizing profits

Interestingly, Boeing and Airbus forecasts for the middle of the market are almost identical.

''However, Airbus has a 100-seat gap in their middle-market product line,'' Baseler said. ''This presents a terrific opportunity for Boeing.''

As markets expand and frequencies and volumes increase, airlines will continue to mix and match various airplane size and range combinations to meet changing competitive circumstances in city-pair markets, Baseler said. The right mix can significantly aid profitability.

For example, a carrier may fly daily nonstop routes from Los Angeles to Washington, D.C., with Monday mornings and Friday evenings representing peak travel times between these two cities. A carrier with a flexible, optimal fleet mix may choose to use its highly efficient Boeing 7E7 on these peak routes, and switch to its smaller aircraft during non-peak days or times. This will help carriers optimize loads and maximize value.

''A new middle-of-the-market product with greatly improved efficiency and capability will enable airlines to grow profitably by opening new markets,'' Baseler said. ''Airlines can take advantage of a comprehensive family of Boeing products to perfectly match demand on any given flight segment—even as markets change.''

What is the middle of the market?Listening to MoM

The 7E7 is the airplane Boeing's customers have said they prefer.

''Airlines have expressed a desire for an airplane that optimizes efficiency rather than speed at this time,'' said Mike Bair, senior vice president of the 7E7 program for Boeing Commercial Airplanes. ''Though the new airplane will also be as fast as today's fastest airplanes, efficiency is what they really need.''

(For more on the 7E7 program, see Q&A with Boeing 7E7 Program leader Mike Bair.)

The new Boeing 7E7 not only will complement the Boeing 757 and 767 families—which will continue to be valuable at shorter ranges—it also will provide significant economic advantages over its nearest competitor, the A330.

By using new materials and technology such as advanced composites and new engine technology, the 7E7 is predicted to burn up to 25 percent less fuel than the A330 and have an increased range of approximately 1,500 nautical miles.

''This will result in lower seat-mile costs for our customers, increasing their profitability,'' Bair said.

The airplane also will have a modest increase in speed, flying at speeds around Mach 0.85 (versus Mach 0.80 for the 767-300ER), Bair said. Faster speeds lead to greater frequencies and increased revenue, but the biggest difference with the 7E7 will be in its increased efficiencies.

''Airlines will love it for its economics, passengers will love it for its ability to get them point-to-point in greater comfort, and the world will love it because it'll be environmentally friendly, like no other airplane in the sky,'' Bair said. ''Efficiency, comfort, speed, point-to-point travel—it's all at the heart of the entire Commercial Airplane strategy.''

Timing is key

Boeing launched the 777 into service relatively recently, in 1995, and even the oldest of these large in-service aircraft won't reach potential replacement age until after 2015. The 737 family also is strongly positioned with new models featuring the latest technological advances for smaller markets. However, the percentage of the worldwide fleet in the middle of the market that's getting older is increasing dramatically for both single- and twin-aisles.

The greatest need for replacement will occur in the next market upswing, Baseler said.

''Fleet analysis shows that a significant portion of the current middle-of-the-market fleet will need replacing by 2008,'' Baseler said. ''This represents a significant replacement opportunity of aging aircraft in this segment, as over 40 percent will be 20 years old or older by this time.''

The biggest opportunity is growth. Boeing's new airplane family is optimally positioned to be available during the airline industry's next cyclic upswing. As the 777 did in the mid- to late-1990s, Boeing's new middle-of-the-market offering, the 7E7, will provide the world's airlines with a stateof- the-art tool with which to grow their networks profitably.

''Ultimately,'' Baseler said, ''it's the responsibility of the airplane manufacturer to provide the strategic keys to airlines to serve the middle of the market.''

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